New Kindle will light another Fire under telcos

Whilst the world’s leading journalists pontificate on the damage Amazon’s Kindle Fire will cause Apple, Google, Android, RIM, et al, The Insider is more worried about the damage it could do to the telecoms industry.

For those of you that have managed to avoid all the press on the subject let me summarize that Amazon has just released a veritable arsenal of color Kindles, one thinly disguised as a tablet, set to blow the market apart. With the Kindle Touch (starting at $99), a regular Kindle ($79) and a Kindle Fire tablet ($199) Amazon has just introduced what ZD-Net describes as a “near disposable e-reader/tablet era that will split the market between Amazon (consumption based profits) and Apple (high end brand profits). Every technology company caught in the middle is going to have some serious problems.”

At these prices, it’s not about hardware (which is obviously heavily subsidized), it’s all about the consumption of Amazon services like books, music, streaming movies and applications. The Kindle Fire is an extension of Amazon’s store. In fact, as a Wi-Fi only device and with internal storage limited to a tiny 8 GB (enough to store some media but certainly not much), it is a pure ‘cloud’ device, almost totally reliant on it’s connectivity to the vast realm of Amazon’s cloud environment. If the threat to every CSP in the world is not yet apparent let me quote from a statement made by Amazon CEO Jeff Bezos: ”We don’t think of Kindle Fire as a tablet - we think of it as a service.”

Where Apple’s iPad was a brilliant hardware platform that attracted developers to write applications, the Fire is all about a means of delivery for a plethora of content already sitting on Amazon’s digital shelves. And, like Apple’s iTunes, customers don’t even have to think when they buy something, it’s simply one click away. Make no mistake, the Kindle is a media consumption device. The absence of a camera supports the theory that Amazon doesn’t want you to produce anything on it, it’s just a vessel for channeling purchases. Whether the market likes that remains to be seen, but the pricing is such that they will probably overlook the shortcomings and not compare the Fire to the iPad. Each device will own its own part of the tablet market and it is hard to see where anyone else will fit in.

Even though the Amazon devices are based on the Android OS it has been heavily customized to suit the Amazon environment and does not even provide access to Android’s Market Place. Whatever you want will be in Amazon’s world – only! Doesn’t that remind you of the ‘Great Walled Garden’ crisis the telco industry went through a few year’s back? It seems if you are Amazon or Apple it’s OK to close out anyone that doesn’t want to be part of the family.

There must be a few CSPs out there wondering what they have to do to get some of this action. Forget it, it’s too late. No single CSP has the market presence of an Apple or Amazon or Google, nor the breadth to be able to provide the whole pie to customers. The only piece they can really offer is the communications channel, and we all know the challenges facing the industry to do even that profitably.

So, what other part, if any, of this Amazon food chain can a CSP feed on - billing, service delivery, device management, cloud services, app store? Well, it’s nothing actually, because Amazon has all of this, and a unique, highly customized and very ‘sticky’ device as well. Presumably, the only thing a CSP can offer is the dreaded ‘big fat pipe,’ and that paid for by a consumer market constantly demanding cheaper and greater bandwidth for access to all those OTT players, about to be headed by Amazon.

Excuse the pun, but Amazon’s Kindle Fire may quickly turn into an inferno that could seriously burn the telecoms industry. Could this create new Wikipedia definition for ‘fire-fighting?’ Better get the extinguishers ready.